Dental and medical products company Henry Schein (NASDAQ: HSIC) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 5.2% year on year to $3.34 billion. Its GAAP profit of $0.84 per share was 16.9% below analysts’ consensus estimates.

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“We are pleased with our financial results for the third quarter, with sales growth accelerating in each of our reportable segments including solid market share gains in our distribution businesses as we are once again focused on driving growth now that the cyber incident is fully behind us. This strong sales performance was a key driver of the underlying improvement in our operating income,” said Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein.

Company Overview

With a vast inventory of over 300,000 products stocked in distribution centers spanning more than 5.3 million square feet worldwide, Henry Schein (NASDAQ: HSIC) is a global distributor of healthcare products and services primarily to dental practices, medical offices, and other healthcare facilities.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Henry Schein’s 6.1% annualized revenue growth over the last five years was mediocre. This was below our standard for the healthcare sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Henry Schein’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Henry Schein’s organic revenue was flat. Because this number is lower than its two-year revenue growth, we can see that some mixture of acquisitions and foreign exchange rates boosted its headline results.

This quarter, Henry Schein reported year-on-year revenue growth of 5.2%, and its $3.34 billion of revenue exceeded Wall Street’s estimates by 1.9%.

Looking ahead, sell-side analysts expect revenue to grow 3.2% over the next 12 months. While this projection suggests its newer products and services will catalyze better top-line performance, it is still below average for the sector.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Henry Schein was profitable over the last five years but held back by its large cost base. Its average operating margin of 5.6% was weak for a healthcare business.

Analyzing the trend in its profitability, Henry Schein’s operating margin decreased by 1.8 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Henry Schein’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q3, Henry Schein generated an operating margin profit margin of 4.9%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Henry Schein, its EPS declined by 4.9% annually over the last five years while its revenue grew by 6.1%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of Henry Schein’s earnings can give us a better understanding of its performance. As we mentioned earlier, Henry Schein’s operating margin was flat this quarter but declined by 1.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q3, Henry Schein reported EPS of $0.84, up from $0.78 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Henry Schein’s full-year EPS of $3.17 to grow 28.5%.

Key Takeaways from Henry Schein’s Q3 Results

It was encouraging to see Henry Schein beat analysts’ revenue expectations this quarter. We were also happy its organic revenue narrowly outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this was a weaker quarter. The stock traded up 6.8% to $69 immediately after reporting.

Is Henry Schein an attractive investment opportunity right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.